CROSBY Research – Precision Tsugami (China) (1651 HK/BUY): GPM improved despite slowdown in order flow

13 Nov 2023

Amid the slowdown in domestic manufacturing industry affected by macroeconomic uncertainties, demand for CNC machine tools were sluggish as customers suffered insufficient rate of operation, Precision Tsugami (China) (PTC) 1H24 revenue decreased by 32.1% YoY to Rmb1.5bn. The decline in turnover was mainly due to a drop in order and delivery of PTC’s CNC machine tools. Despite the drop in revenue and production units, the company’s overall GPM improved by 3.4ppt to 27.7% in 1H24, as its efforts in cost cutting along its supply chain in the past few years started to pay off. Net profit dropped by 26.4% YoY to Rmb221.3m in 1H24.